MEA Q3 2022

News African Energy Chamber Urges United States (US) to Lift South Sudan Oil Sanctions (By NJ Ayuk) Four years have passed since the U.S. imposed sanctions on South Sudan’s oil industry. The goal had been to prevent oil money from funding the civil war that had been raging since 2013. By curtailing the ability of businesses and organizations to provide revenue for the South Sudanese government, U.S. officials reasoned, they could pressure President Salva Kiir to end the conflict plaguing his country. Whether or not you believe the sanctions contributed to peace, the war has indeed ended. Government leaders signed a peace deal in 2018 and formed a unified government in 2020. Why, then, do sanctions that were intended to draw the war to a close remain in place? At this point, what was initially meant for good is now doing harm. The sanctions are hindering foreign investment in South Sudan oil and gas projects and, because of that, preventing the country from harnessing its natural resources (3.5 billion barrels of proven oil reserves) on behalf of its people. The sanctions are making it needlessly difficult for South Sudan to use oil and gas to foster economic growth, create jobs and business opportunities, build capacity, and — particularly important — develop gasto-power programs capable of minimizing the country’s extensive energy poverty. I have no doubt that the U.S. imposed sanctions on South Sudan’s energy industry with the people of South Sudan in mind. Their objective was to help free them from violence and protect lives. Now, the African Energy Chamber is calling upon U.S. officials to make another decision with the South Sudanese in mind: Lift the sanctions. Time to Release the Chokehold The U.S. sanction on South Sudanese oil and gas production has focused on 15 businesses and government units, ranging from international and local oil companies operating in South Sudan to the South Sudan Ministry of Petroleum and Nile Petroleum Corporation (Nilepet), South Sudan’s national oil and gas company. Each was added to the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) “Entity List,” a compilation of foreign businesses, organizations, and individuals “believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States.” As a result, oil and gas exploration in South Sudan has become considerably more challenging. If a company, government, organization, or individual wants to export or reexport specific items (oil) from an entity on the list, they must first convince the U.S. government to let them proceed by getting a special license. Violating these requirements could result in criminal or civil proceedings, denial of export privileges, and possibly even being added to the Entity List as well. Sanctions Are Making Resolving Energy Poverty Harder The U.S. sanctions also serve as an obstacle to the production of natural gas in South Sudan, which could be used to help alleviate energy poverty. South Sudan has one of the lowest electrification rates in the world: As of 2020, only 1% of the country’s 12.5 million people had access to electricity. Even those connected to the grid must cope with frequent blackouts and load shedding. Gas-to-power projects could make a tremendous difference in South Sudan. But without oil and gas revenue, building gasfired power plants is extremely difficult. Currently, the country is not producing natural gas for export or domestic use. Sanctions Are Slowing the Move to Renewables Some may argue that South Sudan will be better off without an oil and gas industry, and that the country should simply focus on renewable energy projects like solar, wind, and hydrogen. Renewables do offer promise for South Sudan, but how in the world will South Sudan pay the billions of dollars necessary to develop the necessary infrastructure without a healthy economy? And without the revenue, jobs, capacity building, and business opportunities that come from a thriving energy industry, how exactly is South Sudan going to rebuild its economy in the short term? Further Complications I also urge the U.S. to consider who will be capitalizing on South Sudan’s petroleum resources if the Department of Commerce continues to discourage investors from exploration and production there. The most likely candidates are governments and companies that aren’t concerned about the United States’ Entity list — or are already on it. China is already a major player in South Sudan, while Russia and the South Sudan Petroleum Ministry have been discussing the possibility of working together. So Much to Offer It is frustrating to see South Sudan’s energy industry struggling to build momentum, especially when you consider its promise. That potential will be showcased during South Sudan Oil & Power (SSOP) 2022, “The Gateway to East African Energy.” The conference, set for Sept. 13-14 in Juba, is being organized by Energy Capital & Power, an Africa-focused investment platform for the energy sector, in partnership with the South Sudan Ministry of Petroleum, Ministry of Energy and Dams, and Ministry of Finance and Economic Planning. The African Energy Chamber is proud to be an event sponsor. Energy Capital & Power’s Senior Director, James Chester, recently urged governments and countries to consider what South Sudan has to offer.